Category Archives: speaking up

It’s been a long time since I posted anything here, mostly because I’ve been busy with work (which is a good thing!), and a little bit because not that much has changed in what makes compliance & ethics (C&E) effective. I know for marketing purposes I should be repurposing and restating, and I haven’t.

Today I’m writing about something that isn’t strictly C&E, although it is about the E. Emotions are running high about the election, and on my Facebook feed, I’ve seen article after article after article analyzing why and how and whom to blame or credit. I’m past that now.

I don’t think everyone who voted for Trump (#imwithher) is racist or misogynistic or homophobic or uneducated or backwards or whatever other deplorable adjective people are using. I am one of those people who took him literally and seriously who is also afraid of the other people who took him literally and seriously and are launching attacks on everyone who doesn’t look like them whom they fear or resent.

So this is where I am: I don’t care right now who your candidate was or why. I don’t care why the election turned out the way it did. Because there are children afraid to go to school and adults afraid to leave the house, and many of them don’t even feel safe there.

It turns out political correctness did us a disservice because it drove the worst of our human impulses underground where it festered and seethed. I’m grateful to President Trump that all of it is in the sunshine now where we can see it and protect against it.

The Constitution guarantees basic freedoms for everyone, regardless of whether they believe what you believe or value what you value. Regardless of whom you voted for, as a human being, at this moment in history, we have an ethical duty, if we support the Constitution of the United States, to fight against the people who are spray painting swastikas, who are calling blacks “niggers” and telling them to go home, who are ripping hijabs off women’s heads and telling them to hang themselves with them, who are grabbing women in parking lots by the crotch and asking “are you happy now, you liberal cunt,” who are chanting “build the wall, build the wall” in elementary schools, and who believe that Trump’s victory means that their view that making America great again means making it supremely white again through whatever means necessary is the majority view.

In the decades since I first watched Star Wars and read The Diary of Anne Frank, I have wondered whether I would be brave enough to be Luke or Han or Leia or Miep. It grieves me that we all have the opportunity to find out.

I don’t care whom you voted for or whether you voted. Right now, we have to fight the tyranny that’s happening locally. We have a gift in the transparency of the hatred and fear bubbling out of the ground everywhere. It’s time to gird our loins and fight, not as far away as Washington, but in our own backyards. I really hope I’m not alone in this fight.

A friend of mine posted a link to this article, titled “Where Dishonesty Is Best Policy, U.S. Soccer Falls Short.” The article talks about the prevalence of exaggerated falls (“diving” or “flopping”) in soccer, the advantage those falls gain for teams, and the impact that eschewing fake falls has on the performance of the US Men’s National Team (USMNT) at the World Cup. We see similar behavior in basketball in an effort to get the referee to call a foul. The goal (haha, see what I did?) in soccer is the same – fool the referee into calling a foul, and use the call to gain some ground or even score.

The article asks the question, “Are the Americans bad at playacting? And if so, should they try to get better?” The reaction of most players on the USMNT made me proud as a compliance & ethics (C&E) professional. Many quoted in the article flat out said that they’re bad at playacting and don’t foresee a time when they’ll engage in that kind of behavior.

The author of the article and Jurgen Klinsmann (the USMNT coach) would love for the USMNT to get better at diving because both would love to use the USMNT actually win a World Cup. I think most of us would, even those of us who haven’t paid attention to soccer since elementary school when our dads forced us to play.

At the same time, the article notes that it goes against the American ethos of “fair play.” Many of the comments on my friend’s Facebook post indicated that an increase in flopping would drive the commenters away from soccer altogether.

It’s curious to me that we seem to have a nation of soccer players, given the prevalence of soccer moms. It shouldn’t be a lack of understanding about the rules of the game that’s kept U.S. engagement with soccer so low. I’m sure that that a cursory Google search would turn up hundreds of articles containing analysis on why we don’t love soccer like the rest of the world does.

For the purposes of this blog post, though, let’s assume that the reason is that we’ve never won a World Cup. Let’s also assume that being a nation of rabid, consistent, soccer fans is something we want. If that’s the case, shouldn’t we play the game that the rest of the world is playing rather than the game that we play at home?

I’ll admit I’m on the fence about this, which troubles me, because there are clear parallels between flopping and corruption. Our average employee would say that they are completely against corruption and bribery. But then a situation presents itself that makes the corruption seem less like corruption, like the fact that “everybody is doing it,” and suddenly, what was black and white turns all kinds of muddled gray.

This is what’s hard about C&E. The rules are black and white, and our messages tend to be black and white. Easy-peasy. We lose that ease the second that the rules and our messages make contact with reality. Maybe there’s a disconnect between what the rules say and what our managers actually do. Maybe we’re required to compete fairly when everyone else is cheating (or “cheating” depending on how you interpret it). If we don’t acknowledge the gray areas and if we don’t welcome hearing about them, everyone loses.

An acquaintance of mine on Facebook casually announced earlier this week that she may have violated the Foreign Corrupt Practices Act. She didn’t state it that way, of course. Instead, her status update detailed the various people to whom she had to pay exorbitant “fees” and “tips” in order to get her visa to India processed and granted in a single day. She bragged about her ability to negotiate the demanded price lower by 30%.

She’s smart and educated. She graduated from an Ivy League school for her undergraduate degree; she earned an MBA from a top ten business school. She is diligent about keeping up with her required training. She might work for your company, and you would probably be thrilled to have her.

Maybe this acquaintance didn’t violate the FCPA. She definitely bribed the government official who approves visas. I suppose you could argue that what she paid was a facilitation fee. I don’t know the nature of her trip, so I would be speculating if I claimed that she was gaining some sort of business advantage in paying the extra fees. In any event, I don’t think that the DOJ or SEC will be pursuing her over the tiny potatoes this constitutes in the worst of circumstances.

I don’t claim to be innocent in this. I contemplated sending her a note, letting her know how her status update could be interpreted. I might have decided to do it, had she been a close friend, but she is an acquaintance, and so I remained silent. (You might do the same based on the looks on people’s faces at cocktail parties when they find out you work in compliance & ethics. It has become one of my favorite reasons to meet new people.)

It makes me wonder how long slippery slopes are. It makes me wonder whether, when we say behavior like this is ok, we set our employees up to fail on our behalf on stages that are magnitudes larger when our colleagues lack the judgment to do the right thing. And it makes me wonder how we can expect employees who observe questionable behavior to come forward when we spend so much time mired in the gray.

A sinus infection wiped me out last week, but in between bouts of sniffling, coughing, aching, and sleeping, I watched Star Trek into Darkness. I realize that this makes me one of the last people on the planet to see it, and yes, I know I probably didn’t get the full effect at home instead of the theater. The two things that struck me hardest about the movie, though, related to the plot instead of the visual effects. [Warning: spoilers ahead.]

First, over the weekend, I stumbled across an interview with Peter Weller, who played Admiral Marcus in the film. Weller pointed out that audiences consider Captain Kirk to be the hero of the movie and Admiral Kirk one of the villains. This made him laugh because the captain, true to his character, disobeyed orders, flouted Starfleet regulations, and was generally insubordinate – a routine day at the office for Kirk. Admiral Marcus did his job as the head of Starfleet: he recognized a threat (approaching war with the Klingons), he created a strategy to minimize the threat, and then he executed his strategy, mostly within the bounds of Starfleet’s regulations (there is that pesky one about Starfleet not being a military organization but an exploratory one).

Second, there’s a scene in the movie when secret, mystery weapons appear at the hangar (or whatever the equivalent is called for spaceships) for loading onto the Enterprise. Scotty, the engineer, refuses to sign off without an inspection out of a sense of duty for the safety of the ship. Kirk cajoles him to skip the inspection, sign the paper, and allow the torpedoes on board. Scotty continues in his refusal, growing more agitated that the engineer of a ship would not be allowed to inspect such dangerous cargo. Kirk devolves into threatening Scotty, and so Scotty quits his job rather than be party to something that he knows would be wrong.

For a summer blockbuster, Star Trek into Darkness packed a lot of compliance & ethics into its entertainment. We got two whistleblowers in 132 minutes in a movie about space exploration. Both Kirk and Scotty end up being heroes at the end of the movie – good news, and good for our cause in C&E. I suspect, though, that employees face situations like the ones faced by Kirk and Scotty every day, but they don’t stand up the way Kirk and Scotty did. It’s not that our employees lack moral courage. I think it’s that they see that their own movies could go in other ways, that they may not get happy endings. Kirk died. Scotty drowned his sorrows and his outrage in alcohol. If the movie had been something other than Star Trek, or a summer blockbuster, if it had been a drama released in December, Kirk probably would have stayed dead, and we’d find Scotty in increasingly worse bars until he became a shadow of himself who lost all his friends and family. Employees who observe serious misconduct suspect that the latter is the movie that they’re in. As a result, they fear coming forward. It’s up to us in C&E to rewrite the drama script to be a summer blockbuster with a happy ending.

[I’ll be at the Ethics and Compliance Officer Association (ECOA) Annual Ethics and Compliance Conference (AECC) next week in Chicago. I’m giving a pre-conference workshop on September 24 on global communications. It has the incredibly long title of “Beyond E-mail: C&E Communication for a Global, Distributed Audience (or How Do I Communicate with People Who Don’t Have Access to Computers or Who Don’t Speak English as Their Primary Language).” If you’ll be at the AECC, too, please come find me and say hello!]

It’s hard to face the news every day because so much of what’s on the front pages, paper or electronic, of the world’s newspapers is grim. Even when you immerse yourself in the news about compliance and ethics (C&E), the news tends to be discouraging – C&E failures sell papers; C&E successes do not ( “We have business conduct standards, everyone follows them, and nothing terrible happens.”)

It takes stepping outside the bubble to be reminded of why the failures keep happening. Our businesses are not mechanical or digitized systems. Our businesses are made of people who all have their own interests and hobbies and priorities. We assume that C&E is in that swirl somewhere, but I’m not so sure.

A friend and I went to a wine bar in Austin over the weekend. We ordered our glasses of wine and continued our conversation from earlier in the evening, when we were interrupted by the two gentlemen sitting to our right. They asked the usual questions about what we did for a living. She is a Chief Compliance Officer; I am a C&E consultant. Both of them were stumped by the term “compliance and ethics” despite having been in the white collar workforce for at least 25 years. After some explanation, the usual jokes started about not being compliant or ethical at their employers (both “large, international software companies”).

The jokes weren’t all that funny, but in their context, they weren’t meant to offend. What I did find funny was that when we started having a deeper conversation about the things that are probably going wrong at their companies, they didn’t believe us. We explained about corruption and conflicts of interest. Both of these men were confused by the topics and were incredulous that large companies cared about these issues.

I don’t want to be one of those people who draws huge conclusions from a sample of two guys making conversation because they were bored, but it turns out that I am. These two men are the mythical “average employee.” C&E rings only the dimmest of bells for them. They have not been keeping up with the news about GSK and JP Morgan – in fact, they didn’t know that anything out of the ordinary was happening with these companies. We didn’t get into any details, but I’d bet $20 that if you described the underlying allegations that have GSK and JP Morgan in the news without any mention of C&E or the law, that neither of these gentlemen would immediately assume that the companies had done anything wrong.

I’m actually encouraged by this. If the primary reason that people don’t come forward to report misconduct is because they didn’t know what they were seeing was misconduct, we can fix that. We can fix it with more effective communications and training, and we can fix it by getting out of our offices and having genuine conversations with our employees. (I do not recommend doing it at a wine bar in Austin.)

I was in Australia last week on vacation and got caught in a disconcerting conversation with the taxi driver who took my friend and me from the Sydney airport to our hotel. The conversation started innocuously enough, with him asking us where we were from, and us asking him the same. It turned out that he was from Afghanistan and had been in Australia for 20 years. He told us that much of his family was still there despite him trying to get them to Australia. I noted that it’s difficult to emigrate to Australia, and that’s when what I thought was idle chitchat took an unexpected turn.

The cabbie told us that it is indeed difficult to emigrate to Australia unless you know the right people to bribe and have a lot of money. He said that there were several people in the immigration department who had made millions and millions of dollars in $25,000 chunks by bringing in hundreds and hundreds of their own “family” members. As I was trying to wrap my mind (which was hazy from jet lag) around what he was saying, he went on to tell us how dangerous it is in Afghanistan. He said that thieves were rampant and that they’d moved on to include stealing people – kidnapping. Apparently, the son of a wealthy businessman in the town where the driver’s family lived got snatched off the street and held for a steep ransom. The businessman was able to negotiate the price down, and he paid it, but the kidnappers had beaten his son so severely that the son was unable to recognize his parents.

The driver told us that most of the people in the Afghani government are criminals. He said that there is a drug ministry, but that instead of preventing the drug trade, the ministry facilitates it. This ministry has helicopters waiting to take opium to former Communist-bloc countries. The driver told us that there’s a remote place in the mountains where the highest quality opium is grown, fed by purified water. According to him, it’s the CIA that purifies the water for the opium. The criminals in the Afghani government all work for the CIA, including the minister in charge of drugs, and that the CIA is responsible for distributing opiates to the former Communist-bloc countries to keep the populations there quiet and muddled.

The drive from the airport to the central business district in Sydney is only thirty minutes, and as you can see, we got a lot of information from him during that time. (We got more than this, but this is enough to get a good flavor for the ride.) I think part of the reason he was so open in his conversation is a quirk in taking cabs in Australia, which is that the first seat a fare occupies is the passenger seat in the front rather than the back.

I don’t know where you are on the scale of conspiracy theorists. I don’t think many of us have the perspective (or security clearance) to affirmatively confirm or deny what the cabbie relayed to us. What I do know is that the driver believed in his heart that all of what he told us is fact, and that we wouldn’t have heard what he had to say if one of us hadn’t been in the front seat.

All of this to say that throughout our organizations, employees are making, collecting, and sharing stories. Some of them may be more true than others: HQ approves of us using the travel agency to create a secret fund to encourage doctors and hospitals to use our products; management wants us to hire the sons and daughters of government officials to facilitate us the award of certain projects to us; the company talks about the Code of Conduct and expectations of how we do business, but here’s the way it really works.

We do a lot of traveling as compliance & ethics (C&E) professionals, primarily to do training or to run investigations. Both of those instances are the equivalent of riding in the back seat of an Australian taxi – the formality creates a divide between the person with the stories and the right audience. It’s up to us in C&E to figure out how to get in the front seat of the taxi and find out what our employees are really thinking.

[On this 12th anniversary of one of the worst days in U.S. history, I hope you’ll take a minute to remember all of the people who lost their lives and their loved ones but also the resilience and spirit of community that got us through the aftermath.]

[I’m on vacation this week, so I’m reposting this article, which originally appeared as a guest post on Tom Fox’s blog. Thanks, as always, to Tom for his support and generosity.]

It’s been years since I had a subscription for paper delivery of the news. I read the news either on my computer or on my phone, and I tend to skim the headlines until I see one that interests me (usually an article on the most recent compliance & ethics failure). A few weekends ago, I visited friends who still have the Sunday New York Times delivered to their home, and as I sipped coffee, leafing through their paper, I stumbled across an item I would have missed electronically: “The Whistle-Blower’s Quandary.”

The authors of this piece, found in the Opinion section, are a trio of professors who did a series of studies on why and when people blow the whistle. The article starts with an obligatory mention of Edward Snowden, and I almost moved onto the next item in the paper, but their definition of whistleblower caught my attention: “research participants… [who] witnessed unethical behavior and reported it.” This is the behavior we in C&E try to encourage among our employees, and so, intrigued, I kept reading.

In one of the studies, the participants were asked to describe a time that they witnessed an ethical failure, reported it, and why; they were also asked to describe a time that they witnessed an ethical failure, did not report it, and why. In analyzing these responses, the authors found something interesting. When the participants who reported ethical failures described their actions, they “use[d] ten times as many terms related to fairness and justice, whereas non-whistle-blowers [sic] use[d] twice as many terms related to loyalty.” The short piece concludes that if we want our employees to come forward and report the ethical failures that they witness, we need to be emphasizing fairness and justice in our Codes of Conduct, communications, and training, as those are the concepts that encourage speaking up, where emphasizing loyalty will encourage silence.

This reminded me of one of Matt Kelly’s blog posts at Compliance Week, when Kelly reported the conversations that he facilitated with a group of CCEOs on the topic of cultivating C&E leadership. One of the CCEOs at the roundtable said, “The reward for good conduct is keeping your job.” But as Kelly correctly notes, “That approach can convince an individual employee not to violate your Code of Conduct, to be sure. But it does not necessarily inspire him to call out other misconduct, when that is exactly what compliance officers desperately need.” Kelly framed his post with the concept of allegiance, that what CCEOs need are employees who are allegiant, or loyal, to our companies, “people who will act as advocates for the company’s best interests.”

In his blog post, Kelly noted that expecting this level of loyalty from our employees may be a hard sell. Modern companies exist to make money for their shareholders. This has caused a situation where we’re all focused on hitting quarterly goals so that we don’t spook Wall Street. It creates situations where companies don’t, or maybe can’t, exhibit any behaviors that would inspire the kind of loyalty we’re looking for in our employees. We operate in a business culture where companies that prioritize the satisfaction of their employees are studied and celebrated like the rarities they are, but then we don’t emulate them.

Does the piece in the Times mean that we can stop worrying about loyalty and that we should instead focus on fairness and justice? Nothing in life is ever that simple.

A few years ago, the Compliance and Ethics Leadership Council did research into what the leading indicators of misconduct are, i.e., the signs that tell us in advance that we’re more likely to find misconduct at our companies. CELC found that that one of the top leading indicators of misconduct is when employees identify more closely with their individual work groups or departments than they do with the company as a whole. (You can see versions of this at play in many Sales departments and in one of the justifications for violating the Foreign Corrupt Practices Act: “this is how WE do business [insert relevant region here.]”) In follow up research, CELC also found that one of the primary reasons employees don’t report the misconduct that they witness is because they don’t think that the company will do anything about it. Employees don’t believe that there will be what CELC calls “organizational justice,” where wrongdoers get punished.

What all of this boils down to for me is that fairness and loyalty don’t oppose each other, as the professors posited. Loyalty reflects fairness, is an accurate measure of how fair we are. If we consistently enforce our own rules and standards of business conduct, employees will exhibit loyalty by speaking up when they see misconduct. If they see evidence that the company takes its own rules seriously, employees will exhibit loyalty by following the company’s lead and also take the rules seriously. If, however, we make exceptions in how we enforce our rules and standards of business conduct (e.g., we can’t fire John because he’s our top performer even though we know he’s unethical; we’re not going to dig deeper into why we were able to penetrate a new market so quickly because we only care about being successful and not how we were successful), employees will exhibit loyalty by keeping silent and enabling the misconduct.

If we can’t back them up with visible action, sprinkling the words “fairness” and “justice” instead of “loyalty” into our Codes and communications and training won’t inspire the kind of loyalty Kelly and his roundtable of CCEOs want. “Actions speak louder than words” is a cliché for a reason. It may be overused, but ignoring it or discounting it won’t make the underlying wisdom go away.

Have you heard of something called, “Cab+5”? “Cab+5” is a principle used among some consultants and other professionals who travel for work in which they regularly add $5 to the price of their cab fares when they submit their expenses. I witnessed a version of this once when Colleague A was talking about a $100 purse she wanted but had only budgeted $50 to purchase it; Colleague B asked if she was going to wait until the next month to get the purse, and A said, “Nah. I’m about to do expenses, and that’s just a few extra cab receipts.” We all laughed, two of us uncomfortably. Neither I nor B reported what the purse purchaser said, even though both of us knew what she was planning was wrong.

In the moment, I justified this to myself that I shouldn’t raise my hand because I was new to the team and didn’t want to get a veteran colleague in trouble. I didn’t want to endure the shunning that I knew would follow. I also didn’t want the expense submission process to become any more burdensome than it already was. We’d all heard stories from the old-timers about the “good old days,” when submitting expenses involved a simple spreadsheet e-mailed to Finance with no receipts required for expenses under $25 and no itemization for hotel bills. Then we heard the stories about Sales ruining it for everyone by engaging in sketchy behavior, like billing adult movies and the entire contents of the mini-bar back to the company.

Part of the justification also involved the small amount being overexpensed. The conversation immediately prior to the one about the purse was how we were all losing money doing our jobs because of random, lost receipts. Rough estimates put our losses anywhere from $5-$100 a month, and because of the strict rules put in place that didn’t have the flexibility to allow for the exceptions that make business travel more humane, there was no way to be reimbursed. (I have a friend, C, who arrived at her hotel at 1:30am after a delayed flight that kept her from eating dinner. She was exhausted and uncomfortable with the idea of looking for a place to eat in an unfamiliar city, and room service was closed. So she ate the bag of peanut M&Ms from the mini-bar at the exorbitant price of $7, and Finance refused to reimburse her because of the ban on mini-bar purchases. The incident happened seven years ago, but she can still tell you every detail like it happened yesterday.)

In corporate C&E, we often focus on the duty of our employees to do the right thing and to demonstrate their loyalty to the company by not engaging in misconduct. There’s some debate over whether we need to reward employees for doing the right thing – after all, isn’t that why we pay them their salaries? Tom Fox wrote a great article late last month about the role of compensation in preventing corruption and misconduct. One of the things he wrote is that if employees are adequately and appropriately compensated, there’s less need and vulnerability to misconduct.

“Cab+5” and A’s conduct constitute embezzlement. It’s wrong, B and I should have reported it, and we were wrong for not doing so. But I wonder if there’s room at the decision-making levels of our companies to look at the root causes of “harmless” misconduct that seem commonplace and are tacitly endorsed by management in the middle and lower parts of reporting lines. Of course it’s true that employees shouldn’t engage in misconduct, but in addition to making it difficult to do the wrong thing, shouldn’t we also be thinking about how to make it easy to do the right thing?

Last night, I watched an episode of Nine for IX, an ESPN documentary series celebrating the 40th anniversary of Title IX.* The episode that I asked my DVR to record was called “The Diplomat,” and it profiled Katarina Witt, who won the gold medal in women’s figure skating for East Germany at the Olympics at Sarajevo in 1984 and at Calgary in 1988.

I remember watching Katarina Witt in the 80s and 90s. I vaguely remember her rivalry with Rosalynn Sumners in 1984 and have a clearer memory of her “Battle of the Carmens” with Debi Thomas in 1988. I rooted for Sumners and Thomas because they were American, and because nobody wanted the socialists to win, but I didn’t think much about why that was the case beyond the simple fact of the Cold War, never digging deeper into the root causes.

“The Diplomat” surprised me. I was expecting something of a puff piece on Witt, a longer version of the bits they do on the athletes during the Olympics. The producers of the film titled it “The Diplomat” because of the role that Witt played in Cold War politics as the most visible face of East Germany. And because of its analysis on the impact of politics on Witt’s career, the documentary also explained quite a bit about the Stasi, the secret police of East Germany.

With the fall of the Berlin Wall, citizens got access to the files that the Stasi kept on everyone; there were 27 boxes of paper devoted just to Witt. One of the things that East German citizens learned was that they had even less privacy than they thought: their family members and friends were reporting bits of information back to the Stasi all the time.

“The Diplomat” producers interviewed Witt, her coach, and a couple of Stasi historians. They also interviewed a contemporary and colleague of Witt, Ingo Steuer, a pairs skater who won a World Championship and an Olympic bronze in the late 1990s. As elite athletes, Steuer and Witt had the privilege of traveling outside the country to competitions. One night, when Steuer was 17 or 18, an acquaintance went to Steuer’s house, put a piece of paper in front of Steuer, and told Steuer to sign it. Steuer didn’t remember much about the specific contents of the paper, but he did remember that he saw the word, “prison,” and by signing the document, he agreed to keep an eye on Katarina Witt and to report back whatever details he could to the Stasi.

All these years later, Steuer looked haunted when he shared what he’d done. Witt expressed some understanding of why her friends and families informed on her and said that she doesn’t harbor any bitterness. There wasn’t any footage of Witt and Steuer together, even though the interviews of Witt and Steuer were filmed at the skating rink where they both trained as children.

It got me thinking about the enormous burden we put on employees to tell us about compliance failures, given the potential stigma that attaches to whistleblowers. Our experiences on the playground teach us not to tattle. Parents tell children that nobody likes a tattletale when one sibling runs to tell on another. Ingo Steuer reported on Katarina Witt because he was threatened with prison and probably also to have support for his livelihood taken away. Edward Snowden believes himself to have done the right, moral, ethical thing by leaking information about NSA data tracking. In the face of the baggage associated with reporting potential misconduct, are we doing enough to teach our employees why it’s necessary and why it’s the right thing? Are we doing enough to protect them? The world is made up of a million shades of gray when you’re on the line or sandwiched in the middle of a corporation than we see in C&E. I wonder if we’re so focused on clarifying that gray into black and white that we’re missing a critical amount of color.

* Title IX is the portion of the Education Amendments of 1972 that, among other things, prohibited the exclusion of women from participating in sports activities at universities that receive federal financial assistance.

I’ve read a lot of great articles and analysis about what’s happening with GlaxoSmithKline (GSK) and other pharmaceutical companies in China. The Chinese authorities allege that GSK executives colluded with a travel agency to inflate expenses associated with conferences, then use the extra cash as a slush fund to bribe doctors and hospitals to purchase GSK products. It doesn’t look good for GSK.

All of the analysis I’ve read has focused on what companies with China operations should be doing, especially in light of the fact that GSK undertook its own investigation and said it found nothing of concern. We’ll probably see a lot more about that from the Securities Exchange Commission and/or the Department of Justice in the future. Companies were somewhat relieved when the Morgan Stanley decision came out, but the FCPA Professor pointed out some of the reasons Morgan Stanley isn’t a good exemplar, the primary reason being that the wrongdoer admitted that he deceived the company. GSK appears to have all the elements of an effective compliance program in place, and the program appears to have failed (as did Enron’s). It will be interesting to see what the SEC and DOJ have to say about that and if it leads to any reprioritization in the C-suite and on Boards.

I wonder, though, about all the GSK employees that had to be involved for a scheme like this to work and all the GSK employees who weren’t involved but suspected something. Is the entire China operation tainted? Did GSK’s compliance and ethics (C&E) department make it to China and train the employees there? Was there not a single employee who was involved or who had suspicions and thought the alleged bribery scheme was wrong? It appears that the country manager was involved, so maybe any employees who were uncomfortable or wanted to report didn’t think they had any option but to go along to get along.

The human aspect of this fascinates and saddens me. It’s fascinating because it shows in stark detail how people sometimes feel forced into doing the wrong thing. It’s sad because it shows in stark detail how a lack of management commitment to business integrity can corrode a company’s culture. Effective C&E depends on a multitude of oars all pulling in the same direction at the same time. Many of those oars are individuals making decisions in the moment under a tremendous amount of pressure. And when enough of those oars stop going the right way, the entire boat can capsize.